Bank set to toss 5c coin from today

The 5 cent coin, commonly found in handbag linings, car carpet cracks and pen jars, is expected to be ditched by the Reserve Bank today.

Reserve Bank currency manager Brian Lang will announce the bank's decisions on proposals to change New Zealand's silver-coloured coins.

Details were kept top-secret yesterday, with requests for a summary of consultation, the number of submissions and a hint as to their contents firmly refused.

Reserve Bank proposals revealed in November included dropping the 5c piece, downsizing 50c, 20c and 10c coins to discs made from cheaper plated steel, and retaining the monarch's head.

Most retailers use a Swedish system of rounding prices up or down to the nearest 5c. Withdrawing the 5c piece means prices would be rounded to the nearest 10c.

The Retailers Association is one body which has strongly opposed removing the 5c coin - it says the resulting pricing model will turn off customers.

"If there is no 5c coin it makes it very difficult for retailers to use the $.95 or $1.95 price point," said its chief executive, John Albertson.

Rounding up those prices would be unattractive to customers and rounding down would be a significant movement on margins for many retailers, "especially for low-value single items, where there is not a lot of margin anyway".

The association's view was that if the 5c coin was dropped there was potential for prices to go up.

"It is not so much whether people use the coin or not, it's the impact on the pricing model and having credibility with the customer," Mr Albertson said.

Thanks to past high inflation, the 5c coin is now worth less than half what 1c was worth in 1967 - few people would now bother to bend down to retrieve the little coin from the footpath.

It would not be missed by Foodstuffs Auckland, which operates New World, Pak'n Save and Four Square supermarkets.

Spokesman Graham Fabian said the impact of removing the coin would be "not a hell of a lot".

"All we would do is use the Swedish rounding system to the nearest 10c - cash transactions represent only 27 per cent of our total sales."

The Vending Boys co-owner, Andy Parsons, who operates 150 drink vending machines in the greater Wellington area, said although many machines did not accept 5c pieces, changes to the larger silver coins would cost him.

"A lot of older equipment will instantly become obsolete. It's about $1000 for a new coin mechanism, but you may have some marginal sites that only just make you that much a year."

All the expense of re-tuning coin mechanisms and upgrades would come out of his pocket.

The Reserve Bank said in November fears over retail price rises were unfounded.

After 1c and 2c coins were withdrawn in 1990, a survey by the Consumers Institute showed prices actually decreased slightly, and Mr Lang said he believed competition would keep retailers honest when rounding up or down.

The changes would save the Reserve Bank about $2 million a year because the plated steel cost less to make.

ACNeilsen carried out two opinion surveys for the bank on the coin issue - one with retailers, the other with the public.

Banks, security companies, the vending industry and others were also consulted before today's announcement.

Small change

* The Reserve Bank revealed proposals to drop the 5c piece in November.
* The 50c, 20c and 10c coins will become smaller, made from cheaper plated steel, but retain the Queen's head.
* The 1c and 2c coins were withdrawn in 1990.

- NZPA